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H.S. Sobti and Co-engineers and Contractors Vs. the Union of India - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberCompany Petition Appeal No. 14 of 1969
Judge
Reported in6(1970)DLT336
ActsArbitration Act - Sections 14, 17 and 28(1); Constitution of India - Article 299
AppellantH.S. Sobti and Co-engineers and Contractors
RespondentThe Union of India
Advocates: B. Sita Ram and; D.P. Sud, Advs
Cases ReferredBokaro and Ramgur Ltd. v. Dr. Prasum Kumar Banerjee.
Excerpt:
.....or protest after the expiry of the prescribed period - hence, it was held that under sections 14 and 17 of the arbitration act, 1940, the respondent should be stopped from challenging the validity of the award on the ground that the arbitrator had no jurisdiction to make an award after the expiry of the prescribed period - - sharma but, on his failure to execute them, were allotted to the applicant......respect of 5 items, the work was bifurcated and allotted to them and the remaining three items of work awarded to shri a. n. sharma contractor. the splitting up of tender was done with the consent of the parties concerned and accordingly the agreement were entered with them. however, during the actual execution of work. the interests of both the contractors who were doing the work in the same reach of the road clashed, consequently m/s h. s. sobti and co. vide their letter no. 184/hsc/60, dated 13th october, 1960 requested the executive engineer to allot the three remaining unexecuted items pertaining to shri a n sharma contractor to them at the rate at which the same were being executed by shri a. n. sharma. accord' ingly the plea of the contractors that they were asked to do the.....
Judgment:

Om Parkash, J.

(1) This is an application under section 14 and 17 of the Arbitration Act for making the award rule of the Court. The respondent had invited tenders for the work soling and first wearing coat of met tiling on Simla Mandi Road via Bilaspur (Section Ghanna to Nanahol) mile 4/0 to 10/0 The work consisted of the following items:-

1.Preparation of sub grade by excavating earth in all soils up to 9' average depth dressing to camber and consolidation with road roller including disposal of surplus earth within one chain and lift 5 feet. 2. Collection and stacking of hard approved stone for soling at site of work. 3. Laying 6' thick stone soling including packing with stone chips and consolidation with road roller including spreading and consolidation of blinding material moorum or earth etc 4. Collection and stacking of hard approved stone ballast 2' gauge at site of work for wearing coat where no soling is proposed to be laid, 5. Collection and sticking of hard approved stone ballast 1' gauge at site of work for wearing coat. 6. Laying wearing coat of hard approved stone ballast 2' and 1' gauge including screening sprting, spreading to template and consloidation with road roller complete including spreading and consolidation of blending material. 7. Supplying and stacking of moorum at site of work. 8. Collection and stacking of quarry spalls at site of work.

(2) The applicant and one Shri A. N. Sharma, along with other, had submitted tenders for the work. The tender of the applicant was accepted for items Nos 2 to 6 vide letter Ex. OW-2/1 The formal agreement No. 98 (Ex. 0-1) w^s executed between the parties. The remaining three items Nos. 1. 7 and 8 were entrusted for execution to Shri A. N. Sharma on the basis of agreement No. 96 (Ex. 0-2) Shri A. N. Sharma did only a part of the work entrusted to him and then deserted. The remaining work with respect to items Nos 1, 7 and 8 was also entrusted to the applicant. The applicant executed all the items. Disputes had arisen between the parties about the execution of the items and the payments due for the work done by the applicant. In accordance with clause 25 of the agreement, the Chief Engineer referred the disputes between the parties to the sole arbitration of Shri N K. Aggarwal, Superintending Engineer (Arbitration) Ministry of Works, Housing and Urban Development, New Delhi. The applicant filed its claim before the arbitrator. The claim amounted to naorethtnl,00,000/ The claim included additional payment for the three items, namely 1, 7 and 8, which were previously allotted to Shri A. N. Sharma but, on his failure to execute them, were allotted to the applicant. The claim was contested on behalf of the respondent. The main objection was that the applicant was not entitled to any additonal amount over and above what had already been paid to him The arbitrator, after hearing the parties, made an award on 2nd December, 1967, awarding a total sum of Rs. 23.265 1 Paise to the applicant. This included an amount of Rs. 16965/ to be paid to the applicant as additional amount in connection with items Nos.1, 7 and 8.

(3) The applicant, on 22nd Decebrmer, 1967, made an application under section 14 and 17. Arbitration Act, in the Court of the Senior Subordinate Judge, Simla for miking the award of the Arbitrator as rule of the Court. The application was opposed on behalf of the respondents. Objections were filed against the validity of the award. The Senior Subordinate Judge rejected the objections of the respondent and allowed the application of the applicant In accordance with the terms of the award, he passed a decree for the recovery of Rs 23,265-61 P. in favor of the applicant.

(4) Aggrieved by the order of the Senior Subordinate Judge, the respondent had come up in appeal to this Court. The appeal was beared by Mr. Justice P.S. Safeer. The contention on behalf of the respondent in appeal, was that the Court of the Senior Subordinate Judge had no jurisdiction to entertain the application filed by the applicant under section 14 and 17 of the Arbitration Act after 1 5-1967, as the jurisdiction of the Delhi High Court had been extended to Himachal Pradesh on that day and only the High Court was competent to entertain the application. This contention was accepted by the learned Judge. He allowed the appeal of the respondent and held that the decree of the Senior Subordinate Judge was without jurisdiction. The concluding part of the order of the learned Judge reads-

'FACEDwith the situation the parties counsel have arrived at an agreed solution and that is to the effect that in order to obviate any controversy on the question of jurisdiction a chance may be given to the present respondent to present an application in the High Court for making the award the rule of the Court on the basis that this Court has jurisdiction. J may say that it is very clear that the application which has refilled in the impugned order was pursued with due diligence and the law on the point involves intricacies and it would be very appropriate if any delay in presenting the application to this Court is condoned. I hereby condone any delay that may be there and allow a period of 15 days to the respondents to file an appropriate application in the High Court for making the award made in their favor, the rule of the Court. It shall not be available to the present appellant to question the jurisdiction of the High Court in the peculiar circumstances arising out of the agreement at the Bar. I am using the inherent jurisdiction of this Court in making this order'.

(5) In pursuance of the above order, the applicant put in the present application under sections 14 and 17 of the Arbitration Act for making the award rule of the Court. The application was opposed on behalf of the respondent On 8-1-1970, the learned counsel for the parties made statements that the evidence recorded by the Senior Subordinate Judge, Simla in the previous application may be transferred to the file of the present application and may be read as evidence therein. On the basis of the statement of the parties Mr. Justice P.S Safeer directed that the issue framed by the learned Senior Subordinate Judge, Simla in the previous application and the evidence adduced by the parties in respect of those issues both oral and documentary be transferred to the hie of the present application and be read as part of the proceedings. Thereafter the application of the applicant was fixed for arguments.

(6) The respondent has filed objections against the validity of the award. The objections are :-(1) The arbitrator has no jurisdiction to give award about, items Nos. 1, 7 and 8 which did not form the subiect- matter of the agreement No. 98 on the basis of which five items had been entrusted to the applicant and reference had been made to arbitration with respect to those items (2). The arbitrator has no jurisdiction to make the award after 1st May, 1967 in pursuance of the extension of time granted by the Senior Subordinate Judge, Simla as the Senior Subordinate judge himself had no jurisdiction to extend the time after that date (3) The arbitrator was guilty of misconducting the proceedings regard)ng the award of Rs, 1352 against claim No. 3 as there was no evidence on record in support of that claim.

(7) The first question which requires decision in the application is whether item? Nos. 1, 7 and 8 were referred to arbitration and the arbitrator had jurisdiction to make award about those items. It has already been stated and is not disputed, that the applicant had submitted tender for all the eight items of the work for which tender had been called. His tender was accepted for five items Nos 2 to 6 The remaining three items were entrusted for execution to Shri A.N.Sharma, Shri A. N. Sharma did only a part of the work and left the remaining work unfinished. The remaining unfinished work with respect to three items Nos. 1, 7 and 8 was also then entrusted to the applicant. Clause 12 of agreement No 98, executed between the parties, empowered the Engineer-in- Charge to give additional work to the contractor in the present case to the applicant. It was contended by the learned counsel for the respondent that it was on the request of the applicant that the unfinished work with respect to three items had been entrusted to the applicant and that the work was not given to the applicant by the Enginer-in Charge on his intiative and the provision of clause 12 of the agreement No. 98 was not attracted. It is true that the request for the unfinished work with respect to items Nos. 1, 7 and 8 had been made by the applicant. The request had to be made as the work on items Nos. 1, 7 and 8 was to be done before the applicant could undertake work with respect to items Nos. 2 to 6. It was stated by the applicant that material collected by him was going to waste and he had, thereforee, to execute the unfinished work with respect to items Nos. 1,7 and 8 to enable him to do work regarding items Nos. 2 to 6. Admittedly, items Nos. 1, 7 and 8 had been executed by the applicant. It is immaterial that the additional work about the three items were entrusted to the applicant at his request or was given by the Engineer in Charge at his initiative The important point is that additional work was entrusted to the applicant. This was within the purview of clause 12 and the additional work entrusted formed part of agreement No 98. The respondent had been treating the three items Nos 1,7and8as part of the agreement No 98, after they were entrusted to the applicant The claim of the applicant included the amount with respect to the three items Nos. 1, 7 and 8 The respondent never objected that the items did not form the agreement No. 98. The reply of the respondent to the claim with respect to the three items was:-

'THEtenders for the work which contained 8 items of work were invited. As the rates of M/s H. S Sobti and Co. were lowest in respect of 5 items, the work was bifurcated and allotted to them and the remaining three items of work awarded to Shri A. N. Sharma contractor. The splitting up of tender was done with the consent of the parties concerned and accordingly the agreement were entered with them. However, during the actual execution of work. the interests of both the contractors who were doing the work in the same reach of the road clashed, consequently M/s H. S. Sobti and Co. vide their letter No. 184/HSC/60, dated 13th October, 1960 requested the Executive Engineer to allot the three remaining unexecuted items pertaining to Shri A N Sharma contractor to them at the rate at which the same were being executed by Shri A. N. Sharma. Accord' ingly the plea of the contractors that they were asked to do the remaining three items under threats is completely false and misledaing.'

(9) The paragraph extracted above, from the reply of the respondent filed before the arbitrator is indicative of two things. The first is that the Executive Engineer had, on the request of the applicant, allotted the unfinished work of Shri A N. Sharma to the applicant. The second thing is that the respondent had i.ever taken up the position that the three items did not form part of agreement No 98 and were not referred to arbitration. It is, thereforee, to be held that the three items Nos. 1, 7 and 8 formed part of agreement No 98, by virtue of clause 12, and the three items were validly referred to arbitration and the arbitrator had jurisdiction to give decision abou those items.

(10) Another argument, canvassed on the point of jurisdiction, was that the arbitator made a mistake of law apparent on the face of the record in allowing the rates for the three items which the applicant had given in its tender, despite the fact that the applicant had stated in its letter dated the 13th October: 1960 that it would charge rates tendered by Shri A N Sharma. The Explanationn of Shri H. S. Sobti, the sole proprietor of the applicant, was that the letter had been dictated to him in the office of the Superintending Engineer and that he had signed the letter under dures. In its letter Ex. C-l, the applicant had specifically stated that rates for items Nos. 1,7 and 8 will be those, givan in its tender. Inview of the above ci'cunstaces, the arbitrator, did not commit any error, much less any error of law appareut on the face of the record in awarding rates (or three items Nos 1, 7 and 8 which had been given in the tender.

(11) Another error of law pointed out was that there was no evidence for the award of Rs l,352/ against claim No. 3. This claim involved dispute about the length of the road The arbitrator, who was a Superintending engineer, had inspected the spot and had assessed the amount payable against claim No. 3 on the basis of his inspection. The award of Rs. 1352/ is based on evidence This Court does not sit as a Court of appeal over the award of the arbitrator and cannot reappraise evidence.

(12) So far As error apparent on the face of the record is concerned it was observed by their Lordships of the Privy Council in Chawpsoy Bhara Company v The Nivraj Battoo Spinning and Weaving Company Ltd that:- An error in law on the fact of the award means that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can them say is erroneous.'

(13) This view of their Lordships of the Privy Council was approved by their Lordships of the Supreme Court in Firm Madan lal Roshan Lal Mahajan v. Hukamchand Mills Ltd. Indore. The arbitrator has not in the present case, given any reasons for the award. No legal proposi corporation forming the basis of the award has been stated. No question of any error of law apparent on the face of the award arises.

(14) In view of the decision, given in the appeal between the part ies, it is to be held that the learned Senior Subordinate Judge had no jurisdiction to grant extension of time for making the award after 1st May, 1967. The only competent court to do this was the High Court. But both the parties had been taking part in the proceedings before the arbitrator The respondent had never raised any objection that the time for making the award had expired and the arbitrator should not proceed with the arbitration. On the other hand, evidence was adduced before the arbitrator by both the parties. The conduct of the respondent showed that the respondent had acquiesced in the proceedings before the arbitrator carried out after the expiry of four months without any objection or protest. The Respondent 1s, thereforee, estopped from challenging the validity of the award on the ground that the arbitrator had no jurisdiction to make the award afrer the period for risking the award had expired. An arbitrator is a domestic tribunal and the parties who referred their disputes to him for decision can, by mutual consent, which can be inferred from their conduct, acquiesce in the proceedings of the arbitrator who may submit his award beyond the date fixed by the Court for returning the same. Such a consent,would be inferred from the fact that the parties conducted tac case and took a willing part in the proceedings before the arbitrator, though the date fixed for the filling of the award had expired. Reference may be made to Asa v. Mt Bhuran Seth Shambhu Nath v. Sm Surja Devi and M/s Bokaro and Ramgur Ltd. v. Dr. Prasum Kumar Banerjee.

(15) Further, keeping in view the circumstances of the case, I am inclined to extend the time for making the award from 1st May, 1967 to 2nd December, 1967 under section 28(1), Arbitration Act. It is not disputed that applications had been made to the Senior Subordinate Judge for the extension of time and that the time was extended as prayed. Those extensions had now become invalid because it had been discovered that the Senior Subordinate Judge had no jurisdiction to extend time after 1st May, 1967. The parties had been conducting the proceedings before the arbitrator after 1st May, 1967 in the bona fidde belief that time dad been validly extended. The time for making the award is, thereforee, extended from 1st May, 1967 to 2nd December, 1967.

(16) Before parting with the case, it may be pointed out that the learned counsel for the respondent had argued that the agreement with respect to items Nos. 1, 7 and 8 was not in accordance with the proviso ons of Article 299 of the Constitution and was not valid, this ground was not taken in the objections. It was put forth at the time of arguments only. It has already been held that the aforesaid three items had become part of the agreement No. 98 after they had been allot ted to the applicant. It is not disputed that agreement No 98 was validly executed.

(17) The result is that the objections filed against the award are dismissed*

(18) The application filed by the applicant under sections 14 and 17, Arbitration Act, is allowed. The award of the arbitrator is made a rule of the Court and a judgment and decree is passed in accordance with the terms of the award. The applicant will be entitled to recover a sum of Rs. 23,26561 Paisa from the respondent with costs of the application. The applicant will also be entitled to interest at the rate of Rs. 4 per cent per annum from the date of the decree till realization.


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